By: Jeff Beach
BISMARCK, N.D. (North Dakota Monitor) – The North Dakota Supreme Court heard arguments Thursday in a case that could determine whether a state law on underground carbon dioxide storage is constitutional and fair to landowners.
The Northwest Landowners Association and other landowners are suing the state of North Dakota and the state Industrial Commission over a state law that can force landowners to take part in an underground CO2 storage project.
Joining the state in defending its statute are Minnkota Power, Basin Electric Power, Dakota Gasification Co. and Summit Carbon Solutions, the Iowa-based company that has a permit to store millions of tons of carbon dioxide in western North Dakota.
The North Dakota Farm Bureau has joined the landowners in their lawsuit.
Derrick Braaten, representing the landowners, said the state law authorizing amalgamation — forcing landowners to allow carbon dioxide storage beneath their property if 60% of the landowners agree to a storage project — is unconstitutional and doesn’t allow landowners to use the court system to argue for just compensation.
Northeast Judicial District Judge Anthony Swain Benson dismissed the lawsuit in August, ruling that a law passed in 2009 could not be challenged because a statute of limitations had expired. Thursday’s arguments delved into the merits of the case.
Braaten urged the Supreme Court to overrule the district court on the technicalities. He said the Supreme Court could also rule on the merits of the case or send it back to the district court for further arguments.
The Supreme Court took the case under advisement.
Summit Carbon Solutions is seeking to use property in Oliver, Mercer and Morton counties for underground CO2 storage. The underground storage area is referred to as pore space.
Phil Axt, representing the state, noted that North Dakota’s geology is exceptionally well suited to underground carbon dioxide storage. He said the state should have the authority to regulate a shared resource.
He said the case could set a precedent.
“As far as we’re aware, no other court has yet addressed the pooling of pore space interests and the interplay between individual rights, majority rights and regulatory authority,” Axt said. “We think courts around the country will be answering them, but this court is positioned to be the first.”
Paul Forster, attorney for Minnkota Power, argued that allowing a small percentage of landowners to stop an underground storage project denies the majority of a right to profit from their property.
Braaten also argued that state law takes away the right of landowners to challenge the level of compensation if a landowner is forced into a pool.
He noted the potential revenue for Summit Carbon Solutions if it is able to take advantage of federal tax credit for storing carbon dioxide, which the company hopes to gather from ethanol plants in five Midwest states.
“They’re making millions, if not billions, of dollars doing it by collecting government tax credits, and they’re saying we don’t get our share of that, even though it’s our property they’re using,” Braaten said.
About 92% of landowners in the 90,000-acre sequestration area for Summit were participating voluntarily at the time Summit’s storage permit was approved.
Summit Carbon Solutions, which faces a permitting challenge in South Dakota, did not make oral arguments Thursday. Among the arguments Summit made in a brief filed with the court is that the state has a law that forces property owners to participate in oil and gas development.
Braaten argued those property owners are fairly compensated.
The Northwest Landowners Association successfully challenged a 2019 North Dakota pore space law at the state Supreme Court, with justices finding it unconstitutional.
Landowners are also appealing the Industrial Commission’s permit decision for the Summit storage area.
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